A new era for NatWest shares?

Despite extra volatility in recent weeks, the shares are demonstrating potential, argues independent analyst Alistair Strang. Here is his latest forecast.

Maybe recent news of countries opting to abandon Covid-19 protocols, declaring happy days are here again, shall suffice to allow optimism. We hope for a change of mood, especially considering the moribund nature of the UK banking sector.

Three weeks ago, when we covered NatWest Group (LSE:NWG), we had very real concerns about the markets playing games with price manipulation gaps in regard to NatWest share price. Suffice to say, the last three weeks has been terrible, the plethora of gaps now requiring some major dentistry if they are to be covered up!

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The Blue diagonal line on the chart extract below is pretty interesting (if you’re us) as it dates back to 2015. There can be little doubt the wider market also shares some fascination with this downtrend, as it has been careful to manipulate the share price above, then below, then above this trend during the last six weeks in a series of movements which must mean something.

The first two we viewed as extremely dangerous, a pretty severe warning of dangerous times coming. Suddenly though, everything changed last Monday. The market opted to gap NatWest up once again (right hand Red circle), exceeding the downtrend and once again propelling the share price into the realms of potential safety.

Past performance is not a guide to future performance 

Do we understand what this means? Easy answer - nope.

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Does it generate any positive thoughts? A less easy answer is 'yes', especially as this sojourn into the land of hope also has the potential of giving some glory! The market is clearly trying to manoeuvre NatWest's price upward and this seven-year old downtrend is significant.

Thanks to a series of horribly complex reasons, the share price now needs to close above 303p (currently, an immediate target level) to be seen as entering a recovery cycle to an initial 354p with secondary, if exceeded, a longer term 406p.

Even visually, this argument actually makes some sense as it affords the share the chance of closing above the glass ceiling which has formed just below the 300p level during the last three years.

Past performance is not a guide to future performance